Over 50% of People Now Shop For Insurance Online, Is the Independent Agent Doomed?

A recent article found that over 50% of people looking to obtain auto insurance quotes now go online to shop.  This trend will probably continue as insurance buyers are looking for convenience and competitive pricing.  Large companies like Geico, Progressive, and Allstate are throwing millions of advertising dollars to get these customers.

Does this mean the local independent agent is doomed? 

Quite the contrary in my opinion.  I think this presents one of the greatest opportunities independent agents have had in a long time.  What do I mean?  Let me back up and point out a couple of things relating to that article first.

1) The article stated that 54% of consumers turn to the internet for a quote, but most still purchase through an agent or call center.

2) Customers still highly value customer service and typically will still only move to a new company if they are displeased with the current level of customer service. 

This new generation of insurance buyers may shop and purchase differently than previous generations, but the basic principles remain the same.  Ease of buying, great customer service, and a fair price are still important.

Independent agents have the opportunity to partner current technology with their competitive distribution system to give customers every advantage they want.  Many agencies have been scared of detailed websites, real-time quoting, and social media because it was what the “big guys do”.  My comment is “you better grab your bat and glove to play or soon you won’t even be on the field.”  Direct writers are pushing hard to capture this market through advertising and efficient online quoting. 

Independent agents shouldn’t be scared of technology and the new buying trends, they should be embracing it. 

Let me offer up two scenarios for today’s insurance buyers.

 Scenario #1) The customer visits several insurance websites and enters all their information multiple times.  They really aren’t sure what coverage they are buying.  They typically just use the same limits that they have on their current policy to compare.  They get a variety of basic insurance quotes from these companies.  As they review the quotes they are confused trying to compare the multiple options.  After doing their best to determine how to proceed, they decide to go with company A.  They go back online to that company’s website to try to finalize the transaction.  They have a couple of questions so they call the 800 number.  A person tries to answer some of their questions, but the customer is still not 100% satisfied so they call back the next morning.   They get a different person this time that has some slightly different answers than the person did the night before.  Finally, they just go ahead and purchase the new auto policy.  They still have some questions, but it’s just auto insurance right??  Good enough.

Scenario #2) The customer contacts a professional independent insurance agent in their area.  The agent discusses their specific situation and needs and answers any initial questions they may have at that time.  Using real-time quoting technology, the agent then takes their information and “shops’ the insurance to multiple companies all at one time.  The agent then reviews all of those quotes to determine what would be the best fit for that particular customer.  The agent contacts the customer and discusses (phone, in person, e-mail, text, etc.) the selected quote (out of many others) with the customer explaining the coverage, pricing, etc.  The customer then determines to purchase through the agent.  

The agent is available to answer any questions and service this new customer through e-mail, various social media outlets, phone, and of course can also actually sit down face to face with the customer as well.   The agent can add this new customer to their data base to provide valuable e-mail newsletters, post blogs to educate their clients, and hold online webinars on important insurance topics as well.  Do you see where I am going with this?

Some customers prefer to buy online with little to no guidance.  That’s ok.  That’s  not the target market of independent agents anyway. 

For those customers who want friendly local service with the ability to shop multiple companies all on all their behalf, we are here for you. 

Independent agents  have only hit the tip of the iceberg in being able to leverage technology.  The opportunity is ripe and customers who need our help are waiting.

Please note: I reserve the right to delete comments that are offensive or off-topic.

  • I think the sales process has changed. Consumers are now used to going online to search for information because they do not want to be “sold”. However, they do not have enough insurance knowledge to make an intelligent decision. So, the agent comes into play at the end of the sale – after they have done research. They are also using the internet to evaluate their agent and blogs like yours clearly show the consumer that you are the “expert” in your field. More agents should follow your lead.

    • Debbie, I couldn’t agree more. Most people do research and collect information online, but ultimately want someone to guide and educate them through the final buying process. Independent agents have the opportunity to do both. Thanks for your comment.

  • I see independent agents as transitioning from order takers to value givers. Because truthfully, isn’t that what a great agent does? They explain, translate, connect, soothe and above all add value to the insurance seeking and buying process. We’ve “done the time”, educated ourselves so we can serve our clients better and hold ourselves up high as professionals and knowledgeable in our field. When we can showcase these attributes as well as add online conveniences such as quoting, social media, etc. it’s a win-win for the agent AND consumer.

  • Absolutely Carrie. You are spot on. Thanks for you comment.

  • Great article, Brent. I am one of those agents a little wary of allowing customers to do online quoting on my website without any advise, explanation of coverages, ect. so how do we not lose the millions of people out there who are using the internet and still give them the VAlue of our services?

    • Scott, your point is a good one. That seems to be the tricky part. Combining our agent expertise, knowledge, and service with new technology and automation. I think if independent agents can combine the two, we can have tremendous success. Thanks for your comment.

  • The trick to using today’s technology and still being able to have a value conversation with the prospect is in an age old practice . . follow up with the online interaction. Every time someone goes on one of our partner agency’s website we follow up with a phone call to answer any questions that they might have, and to let them know that there are real people behind the website. Don’t call and hard sell them, but use your consultative skills to help them determine their wants and needs. We take the approach that an online search is really a request for quick and easy information. We want to make ourselves available to answer their questions while keeping the conversation as quick and easy as the prospect wants and desires. Just like when you go into a good car dealership the salesperson doesn’t harass you, but they do say “If you have any questions my name is Billy and I will be over here if you have any additional questions.” Technology used properly actually allows us to have more conversations, and introduces an agency to prospects they might never have had an opportunity to meet.
    Billy R. Williams, President
    Inspire a Nation Business Mentoring

    • Great information Billy. I completely agree. I appreciate your comment.

  • Dan Phelan

    One of the largest hurdles we’ve had with converting internet leads to clients is that many of the big online companies only need a minimal amount of underwriting info to generate a quote. We don’t sell any personal lines, but have found that many commercial buyers assume that the underwriting process should be identical to buying personal auto. They have hesitation on answering questions that aren’t related to limits or are beyond “what lines of coverage do you need”. We turn a lot of business away, and decline to quote because of this, but know what we go above and beyond for the prospects that are willing to give us more than 10 minutes of their time to protect their largest investment, their company.

    • Dan,
      My background is in commercial lines and that’s all I wrote for the first five years of my career. I have integrated personal lines into my book of business over the last five years. There is definitely a dramatic difference between personal and commercial line consumers. In fact, it has taken me a long time to adjust the buying style differences. I don’t know the specific numbers, but I know most commercial clients still see the agent as a true trusted advisor and do less shopping online. There is some much more involved with the commercial process and I can’t imagine someone actually quoting and binding online, but I know people try.
      I actually see the “shopping process” quite differently between personal and commercial in the online/social media world. I personally see independent agents using online/social media tools more as a education source and value provider for commercial lines. My goal with commerical line prospects is to understand what I bring to the table and value my expertise. Once I gain their trust, we can begin the acutal buying process. I think with personal lines, independent agents needs to be both, but consumers will expect an “ease of doing business” that rivals the big boys. The difference is we can provide advice and use our expertise to go a step beyond the online companies.
      As I said in my post, some buyers simply won’t fit what we are looking for, so walking away is definitely the way to go sometimes.
      Thanks for your comment.